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Revenue Cycle Management

Revenue Cycle Management Strategies in 2024

Rex H.
Rex H.
15 minute read
February 15, 2024
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Multiple elements contribute to a healthcare organization's revenue cycle. At the front end, patient billing and cost communication strategies determine how quickly and willingly patients pay. Delays and nonpayments can easily put an organization's viability at risk.

At the back end, providers and representatives must manage contracts and claims with insurance providers, hoping for timely payments and minimal to no denials or underpayments. These roadblocks add to the financial load on offices and, ultimately, on patients. Solving each problem occupies medical administrative professionals' valuable time.

Providers do this work in an economy that places an increasingly heavy burden on patients and their budgets. Therefore, new revenue cycle management strategies are necessary to keep up with these changing circumstances and ensure providers remain fiscally healthy while continuing to provide top-level care.

Front-end revenue cycle management strategies

Front-end tasks like up-front collections and cost estimates set the tone for the entire revenue cycle. An outdated point-of-care payment system can result in late or nonpayments. It also affects the patient experience and how each person views the practice.

These RCM strategy updates can stabilize your bottom line by improving how patients interact with your practice.

Complying with price transparency regulations and providing good faith estimates

According to McKinsey & Company, 52% of patients would be willing to pay at the point of care if provided a good faith estimate. With the good faith estimate now established in law, providers must offer this information to self-payers.

Good faith estimate software makes it easy for busy providers to make GFEs the norm. These tools generate and send accurate and compliant GFEs. Many even allow patients to make payments directly from the GFE message.

These tools make it easier and more convenient for patients to fulfill their financial responsibilities. Unlike a GFE received in-office during an appointment, an auto-generated estimate lets the patient manage the financial aspect of care at their convenience.

Taking it further by providing patient cost estimates for all

Insured patients can also benefit from receiving cost estimates for medical care. Out-of-pocket expenses, from deductibles to noncovered services, frequently take patients by surprise.

When practices estimate costs for all patients as the norm, it removes some financial anxiety in receiving medical care. Patients know up front what their cost responsibility will be, encouraging them to pay sooner.

One standout example comes from Florida's Health First, a multi-facility system with four hospitals and 15 diagnostic centers. After struggling extensively with payment compliance and patient confusion, the system began offering universal cost estimates.

The change led to a 27% increase in up-front collections. The system also reached 2.7% of net revenue from up-front collections, compared to an industry average of 0.7%.

With patient cost estimate software, any practice can embrace this kind of policy. It discourages a wait-and-see approach and brings financial responsibility to mind while helping the patient see the provider as an ally.

Increasing up-front collections by making it easier to pay at the point of care

According to research from PYMNTS.com, an online resource for payment professionals, 89% of patients find it easy to pay up front if they know their bill in advance. Providing that cost estimate increases the likelihood of up-front payment, as does the availability of multiple forms of payment.

The U.S. is becoming an increasingly cashless and touchless society, and patients expect those options to carry over into healthcare.

Another recent PYMNTS.com survey showed payments as the second most common friction point between patients and providers. If patients are given a choice:

  • 27% would use a credit card to pay
  • 23% would use a debit card
  • 28% would use a digital payment or mobile wallet method such as PayPal or Apple Pay

In reality, however, only 8% have used mobile wallets to pay a healthcare provider. Credit and debit cards are far more prevalent at 38% and 32%, respectively. By offering more patients' preferred payment methods, providers can collect more at the point of care — even if the patient forgets their wallet.

Providing patient financial counseling

Some patients don't have the resources to pay up front, no matter how many options they have. Therefore, providers must discuss payment options and accommodations with these patients as soon as possible.

As patient collections CEO David Shelton recently told Medical Economics, people want to meet their financial responsibilities. By discussing financial resources and options, providers can increase point-of-care payments. Shelton's clients have increased their up-front payments by as much as 20% by asking about financial barriers.

These conversations allow providers to find payment options for each patient. Options may include payment plans, flat-rate services, or financing options that are the healthcare equivalent of branded credit cards.

Automating eligibility verification and prior authorization in real time

Front-end operations play a significant role in expediting insurance payouts. The faster the practice can verify insurance and authorization for a specific service, the sooner it can receive funds — and the less likely it will be to receive a denial after the fact.

According to a study by Change Healthcare, patient eligibility is the most common reason for insurance denial for nearly 24% of respondents, while the second leading cause — missing information — appeared in just 14.6% of responses.

Automation is the most effective way of expediting insurance verification and authorization. It prevents mistakes from human error and ensures all submissions reach the insurer quickly. Fewer denials occur, and the insurer can process claims faster, putting money in the practice's pocket sooner.

Back-end revenue cycle management strategies

Most insurance payment processes happen at the back end. By streamlining this aspect of revenue cycle management, providers can expedite reimbursement and reduce payment disparities.

Automating underpayment detection

Underpaid claims cost insurers more than $117 billion a year. Those underpayments often stem from provider errors, such as incorrect procedure codes or improper documentation.

Underpaid claims hurt the practice and the provider-patient relationship. When a gap exists between the expected payer amount and the total paid, the patient often carries the balance. Those unexpected expenses cause trust issues and could prompt the patient to leave the practice.

Skilled and certified coders can reduce the frequency of underpayments in your practice, but some will inevitably happen. It's essential to identify those underpayments and follow up with the insurer, so the burden doesn't shift to the patient or the provider organization.

Your best investment as a practice is quality medical coding software. Look for a program that automatically detects errors, including underpayments, and flags repeated problems for correction.

Streamlining denial management

According to Physicians Practice, 20% of all insurance claims result in denials, rejections, or underpayments. Up to 60% of denied or rejected claims never go through resubmission, primarily because of the prohibitive cost to providers. Reworking a denied or rejected claim costs an average of $25 per incident.

Denial management software can reduce that cost and help practices recoup their losses. Each denial comes with a payer denial code that tells the system what went wrong. Automated tools can read those codes, flag them for the correct action, and prioritize denials based on value and approval likelihood.

Also, as with underpayment detection, software tools can identify denial trends by payer, helping your practice to build stronger payer relationships and avoid insurer-specific errors.

In many cases, denial management software can also flag potential problems, such as coding mismatches, reducing your overall denials.

Automating payment posting

Automation also expedites your billing and payment collection process. It reduces or eliminates the need for time-consuming paper billing, which requires more human labor and is vulnerable to error.

According to one report, automated digital billing leads to 20% faster patient payments and a 40% reduction in operational costs. That doesn't include the potential savings from not having to pursue collections.

Faster payment posting also improves cash flow because it increases the likelihood of on-time full payment. In a 2019 InstaMed survey, 77% of providers reported taking more than a month to collect payment. Automation puts money in the provider's pocket faster and improves the patient experience.

Implementing payer contract analytics and renegotiating contracts with leverage

Contract analysis is an essential component of any effective revenue cycle management software. Providers can receive a dramatically different payout from one contract to the next, given differences in contract terms and clause details.

Providers who use contract modeling software have an advantage in negotiations. These tools can efficiently and accurately review multiple contracts, allowing the provider representative to compare terms and choose the most favorable options. As a result, the provider saves hours of staff time and receives more in-depth, actionable information.

Modeling software also calculates the impact of contractual changes, enabling providers to determine the best possible terms before committing to an agreement. This information gives you more leverage when negotiating with an insurance company, which should know its terms inside and out.

Implementing or improving early-out programs

Early-out collections allow your practice to recoup overdue collections before they become bad debt. An early-out program informs patients of their balance due and offers several options for repayment. Ideally, this empowers the patient and provider to settle on a mutually affordable arrangement.

Early-out payment options might include the following:

  • Payment plans
  • Discounts for paying in full
  • Additional payment channels

Early-out should make payment attractive enough that the bill doesn't have to go to collections. If the patient still can't afford the terms, attempts to collect via early-out will fail.

If your practice has an early-out program that hasn't seen success, you may not offer the range of options that would make your program affordable. Whether rebuilding or building a program from scratch, offer as many possibilities as your practice can afford.

Offering flexible payment options

Each additional payment option increases your chances of collecting payment from patients. Revenue cycle management strategies need to consider how representatives communicate payment possibilities and what payments are acceptable. This development is a crucial part of back-end RCM strategy creation.

RevCycleIntelligence recommends offering personalized payment strategies for patients who struggle with medical bills. These payment plans have flexible timelines, affordable regular payments, and multiple payment methods that suit the patient's needs. For example, patients with mobility or memory issues could have a personalized payment plan hosted online, saving them the trouble of point-of-care payment requirements.

Flexibility improves the patient experience for all demographics. The recent Healthcare Payments Twelfth Annual Report revealed that 74% of millennials would switch providers for a better payment experience, despite the assumption by 39% of providers that billing doesn't affect the patient experience.

Patients notice and respond when providers accommodate their needs in payment. It communicates respect, understanding, and an ongoing commitment to patient needs.

Execute RCM strategies with automation that gets you paid and alleviates the strain on your staff

Today's patients expect a level of transparency and convenience only possible through automation. Revenue cycle management strategies must incorporate these tools at every stage, from insurer contract negotiations to point-of-care collections.

MD Clarity gives you automation at your fingertips, with an interface designed for busy medical office administrators. We help you:

  • Create and send patient cost estimates
  • Comply with GFE requirements
  • Collect payments online and at the point of care
  • Minimize denials and underpayments
  • Negotiate better insurer contracts

Ready to break free from yesterday's RCM strategies and embrace the power of automation? Book a demo today, and let's get started.

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